I. Concepts and Characteristics
1. Joint Venture Contract
Pursuant to Section 03 of Standard No. 08 issued and promulgated under Decision No. 234/2003/QĐ-BTC of the Minister of Finance on the issuance and publication of six (06) Vietnamese Accounting Standards (Phase 3): “A joint venture is a contractual arrangement of two or more parties to undertake an economic activity, which is jointly controlled by the venturers.”
Forms of joint venture as prescribed in Section 03 of Standard No. 08 issued and promulgated under Decision No. 234/2003/QĐ-BTC include:
- Business cooperation contract in the form of jointly controlled operations;
- Business cooperation contract in the form of jointly controlled assets;
- Joint venture contract in the form of establishing a jointly controlled entity.
2. Consortium Agreement
The term “consortium” is widely used in the Law on Bidding and, pursuant to Clause 26 Article 4 of the Law on Bidding 2023 as amended and supplemented in 2024, 2025: “A contractor is an organization or individual, or a combination of organizations or individuals in the form of a consortium based on a consortium agreement to participate in bidding, submit a bid in its name, and directly sign and perform the contract if selected.”
A consortium is the cooperation of two or more enterprises jointly participating in bidding and performing a package, being part or the whole of a project under the bidding documents, where a single enterprise would not have sufficient capacity to perform such package.
Accordingly, a consortium is established on the basis of an agreement among the parties to form a consortium for bidding participation. At the same time, the consortium agreement is recorded and takes legal effect through the form of contract execution.
Pursuant to Clause 25 Article 4 of the Law on Bidding 2023 as amended and supplemented in 2024, 2025: “An investor may be an independent investor or a consortium investor.” Accordingly, a consortium investor is recognized as an investor.
II. Comparison between Joint Venture Contract and Consortium Agreement
– Similarities: Both joint venture and consortium are contractual arrangements between two or more legal entities to jointly carry out business, investment, and commercial activities.
– Differences:
| No. | Criteria | Consortium | Joint venture |
| 1 | Participants | Foreign contractors, domestic contractors, or the use of domestic subcontractors, except as otherwise provided by the Government. | Domestic investors with foreign investors or among foreign investors carrying out procedures for issuance of an Investment Registration Certificate. |
| 2 | Purpose | Enables contractors that do not fully meet bidding requirements to cooperate, compete, and perform projects; or used when a contractor lacks sufficient capacity or capital to bid. | Establishment (or not) of a legal entity for jointly controlled business operations, assets, or long-term cooperation, not limited to a few projects. |
| 3 | Legal Relationship | Bidding relationship. | Investment relationship. |
| 4 | Content | Consortium agreement generally includes rights and obligations of members, such as: – Purpose of the consortium; – Duration; – Responsibilities of the leading member; – Responsibilities of participating members. | Joint venture contract provides for: (a) Form of operation, duration, and reporting obligations of the venturers; (b) Appointment of the management board and voting rights of the venturers; (c) Capital contribution of each venturer; and (d) Distribution of products, income, costs, or results among the venturers. |
| 5 | Legal Consequences | Does not establish a new legal entity. | May or may not establish a new legal entity. |
| 6 | Legal Basis | Law on Bidding. | Law on Investment. |
III. Notes
1. For Consortium:
The consortium agreement must clearly stipulate the responsibilities of the leading member and the joint and several as well as separate liabilities of each member for the entire scope of the bidding package.
In case of consortium bidding, each member may provide its own bid security or agree that one member will provide bid security on behalf of itself and other members.
The total value of bid security must not be lower than the requirement in the bidding documents.
All consortium members must directly sign and affix seals (if any) to documents and contracts related to consortium activities.
2. For Joint Venture:
The joint venture agreement may designate one of the venturers to manage or operate the joint venture. The operating party does not control the joint venture but acts within the framework of financial and operating policies agreed upon by all parties under the contract and authorization. If the operating party has full authority to determine financial and operating policies, it becomes the controlling party, and the arrangement no longer constitutes a joint venture.
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